Hawaii auto insurers
earn most in U.S.
A watchdog agency says the
By Rick Daysog
1996 profits set a 10-year
industry record
Star-BulletinAuto insurers in Hawaii earned the highest profit in the nation in 1996, hitting a 10-year industry record, according to an insurance industry watchdog. And state Insurance Commissioner Rey Graulty said he intends to force some insurers to give back some of those profits to consumers.
Auto Insurance Report, a Laguna Niguel, Calif.-based industry newsletter, said in its July 21 edition that Hawaii was the top spot for insurers for the second straight year.
"We have the highest (insurance industry) profits of any state in the last decade," Graulty said.
"Under the new no-fault law, the Insurance Commissioner can force insurers to give these excess profits back to all consumers in the state. This I intend to do," he said.
Insurers, however, said they are voluntarily reducing rates these days, due to the competitive auto insurance markets.
They also said that it's unfair to judge their financial performance on just one year.
Over the longer term, the industry's profits have been on par with the national average, if not below the national average, they said.
Dan Kinney, attorney for State Farm Insurance Co., said that over the past 10 years, Hawaii is only the 27th most profitable state in the nation for auto insurers.
"The industry's average over past 10 years has not been near what they have been in the last two years," said Alison Ueoka, executive director of the Hawaii Insurers Council, a trade group.
Brian Sullivan, editor of the Auto Insurance Report, said Hawaii insurance companies probably earned a profit of 20 percent on every dollar in premiums they took in last year.
That tops 1995's healthy 18 percent profit margin, he said.
Last year, local auto insurers paid out less in claims than insurers in any other state during the past 10 years, Sullivan said.
Of the $561.8 million in premiums they collected in Hawaii last year, the insurers paid out just $260.4 million in claims, or a loss ratio of 46.3 percent.
Rhode Island had the next best loss ratio in 1996 at 55.4 percent.
National average for the loss ratio was 66.6 percent, Sullivan said.
